The Expert Podcast

…Today we're going to look at filing insurance claims for your business First of all how to do it to make sure that you get proper reimbursement for your damages And also look at when you may not want to file an insurance claim which may be counterintuitive to what you're thinking. First of all what is an insurance claim Well, it's a formal notification to your insurer usually through or on behalf of your agent or your broker. That you have incurred a loss in damage and that you believe that loss and or damage. Is covered under the policy. And you usually have to do the claim reporting through a formal claim notification. Provide documents provide evidence We'll talk about that momentarily. How to do that, but it's a formal process usually done through the agent or broker in the commercial lines policy sometimes directly with the insurer. although the broker may get involved, the case will be assigned to an insurance adjuster That is the person or depart. that investigates claims and decides what the payment is. So. How do you make sure that you start the process correctly Well, First of all. plan on doing that as soon as possible You don't want to wait days weeks months there may be a reporting period required You have to do it within a certain period of time or. Within a reasonable amount of time. So you want to do it? As quickly as possible However, one thing that you want to do before you filed the claim, Is read your policy and read this portion of the policy, which talks about the coverage. Which is relevant to your loss And here's a reason why you may have a loss that is covered under your insurance, but if you file it. In a way that…indicates the damage came from another source, then. You may get declined. Perfect example. We had a commercial auto policy where the vehicle. Was damaged because of improper inst…Of an accessory on the vehicle. And the insured initially filed a claim saying that the vehicle was damaged because of this installation. And they said no that's a that's a defective repair That's not covered. Well come to find out. The. Mechanics so to speak that did it was unlicensed and committed fraud and basically had damaged the vehicle It was just like somebody walked up to your vehicle with a sledgehammer and smashed it. That would be covered. So…Because the case was filed incorrectly to begin with it was denied It was a lot of work to to get it re established and redefined that it was done through the, portion of the policy, which was the comp comprehensive portion. So…to make a long story short, read your policy and read the language which is relevant to your exact loss or damage So when you filed the case, you can. Quantify the facts towards that. portion of your policy Again you don't want to misrepresent or mislead or lie or commit insurance fraud cause that'll get you in big trouble and it will be worse than not having the claim paid. But you want to make sure that you file it correctly. Towards the…coverages that you have on your policy. Right. Next thing you want to do to make sure that it's covered. Is you submit documentation showing…the damages the source of the damages the origin of the damages…Again your insurance adjuster will ask for certain documents. But the more that you provide initially. It'll divert that case. Towards different departments within the insurer. There may be. department that…rubber stamps claims that appear on their face to be sufficient. And they don't have to do any more adjusting or it may go to a department that needs more info. Even though you might think of it needs more info The result would be the same sometimes. that will delay your claim or maybe even…result in some or all of the damages not being covered You want to…overwhelm with information to begin with so that you have the higher probability of all of your claims being covered under the policy. Prepare for the fact that you're going to have to sign documents under penalty of perjury stating that things are true and accurate. You're also going to maybe I be required to give a, a verbal statement that's recorded. The adjuster may come out and do an interview with you. for larger claims especially…the other. Part of that that may be disconcerting is that, you know you may have to sign and have things notarized. You know it's a serious thing you're asking that insurance company to give you money could be tens or hundreds of thousands or even millions of dollars. So they want to make sure it's being done properly. And that it matches the coverages now. The question that comes up. Very frequently Should I even put in a claim? Well that's a judgment call obviously if you ha if you deserve to be covered under insurance policy you have every right to put in a claim However, strategically you might want to make a value decision on any insurance claim For example, if you have a $1,000 deductible, And you have $1,400 in loss. You're only going to net $400 benefit from that claim Now what if you have on your policy, a claims free discount on your policy and that claims free discount is two or $300 a year. Well if you put in a claim and you lose that discount, that 400 is going to be eaten up by more premiums over the next two years. So not that you don't deserve the. The claim payment. And not that. You know you should throw money away but strategically you can make that decision. In addition, Even if there's not a specified claims free discount when it comes to underwriting. You'll have to produce what's called loss runs, especially if you change. Insurers, you may remember when you originally got your policy you have to provide loss runs to your new insurer. As part of the application, those loss runs will show any prior claims you have. How much has it affect coverage or premiums it's unknown. But if you only going to net a small amount, Even though it's distasteful you may want to swallow that loss and chalk it up to maybe loss prevention in the future. Also you may strategically want to contact your broker or even another broker a neutral third party to ask them. What about this coverage Is it kind of be very clear that this coverage will be paid? you may want to discuss that with your adjuster. You know the adjuster technically works for the insurer but a lot of times they can. assist you with filing a proper claim Most legitimate insurance companies do want to pay legitimate claims They don't want to avoid payment for claims that are obviously covered under the. If it's a judgment call or if it's a gray area they may want to steer towards the insurance company. But most of the times they want to help you. You may also want to get a third party. consultation maybe a damage estimate. maybe a. expert witness. Four. Additional damages that are not readily apparent. You know if there's damage to your physical premises you may want to get an engineer or an architect or even a general contractor to look to see are there other hidden damages Because if those hidden damages show up two or three or five years later, You may not be able to go back and recoup those coverages So you want to have all that done Now, if it's a larger claim and it's, and it's a complicated, you may want to actually contact an attorney. To put together a claims documentation package and help guide you through that process. That will also prevent or maybe streamline any disputes with the adjuster because. And, the insurance company is going to look at that claim more seriously If you have an attorney involved. If the losses are more financial like, BI business interruption or, some other loss of use, you may want to get an accountant involved to help you quantify what those financial losses are. And determined what the future losses might be. How long has this all kind of take Well the claims process in most states has a statutory requirement. they have to be timely in their response They can't just drag your feet and delay it That's bad Faith. And they have to acknowledge it at least within a certain period of time. And then. A certain statutory deadline to either acknowledge to either accept or deny that claim and your state. We'll have that in their statutes. So those are some…Suggestions and facts for filing a claim. Remember the end result is you want to get coverage for your losses that are legitimate. And you also want a strategically. prepare that claim to maximize the amount of coverage you're going to get and to eliminate as much of the red tape as you can for getting that check in your hand to put you back on track with your business.